How To Keep Tabs on Insider Trading To Spot Multibaggers

You can discover the biggest multibaggers not by analyzing financials but by keeping tabs on insider trading.

Financial statements reflect what has happened in the past, while stock prices always discount the future.

And, one way you can figure out where a stock is headed is to keep tabs on insider trading.

Employees, directors, owners and shareholders buy (or sell) their own company’s stock wither when prices are low as compared to its potential or when they figure something big is about to happen.

In 9.9 cases out of 10 insiders know what is happening inside a company. They are privy to marketing information, price
increases, cost savings, order increases, sectoral information, results of lobbying with the government, company selling real estate assets, open offers, buy back plans, etc.

The great thing is that SEBI and the stock exchanges require all companies to report details on insider trading, which is published DAILY online.

AND ALL YOU HAVE TO DO IS GO THROUGH THE ONLINE INFORMATION DAILY TO FIGURE OUT STOCKS THAT WILL WITNESS INSIDER PRICE ACTION.

Now you will view > Disclosures (http://www.bseindia.com/corporates/ann.aspx?expandable=0 )

Once there, go through each section under “Disclosures”

Submitted by Company

(a) Insider Trading 2015

(b) Substantial Acquisition of Shares and Takeovers (SAST)

(c) Pledge data

Submitted by Registration & Transfer Agent (TRA)

(a) Insider Trading 2015

(b) Substantial Acquisition of Shares and Takeovers (SAST)

(c) Pledge data

Here’s a screenshot of Insider Trading data submitted by companies on 28 June 2017:

Notice that the promoter acquisition in AB Nuvo and Reliance is not substantial. TaMO is inter company transfer while the promoter of Steel Strips and Wheels, Dheeraj Garg, has pledged 2,75,000 shares out of more than 46 lakh shares owned by him. The last two are private limited companies.

In my opinion, the information is not substantial to make a buy or sell call on any of these stocks.

BUT…

The lesson is that you must keep tracking insider deals everyday and I can bet you that you will be able to uncover at least 1 hidden gem every 2 days.